4.1 The need for strong integrity regulation

Ensuring that abatement is real

The business case for carbon farming: improving your farm’s sustainability

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Aside from the usual requirements of preventing fraud and other dishonest conduct, strong regulation of the integrity of offsets is needed to ensure that the ERF delivers genuine abatement. Also, it means that those purchasing ACCUs have confidence that the units are a reliable product.
The logic of integrity regulation can be set out as follows:
  • For any credits-based system to work, the system needs a positive value for abatement, which in turn requires reductions in emissions (or sequestration) beyond what would have happened anyway.
  • If Australia were to grant ACCUs for projects that people were going to do anyway, it would be considerably harder for the nation to meet its target, which is framed as reducing emissions in 2020 below a specific historical level.
  • The object of Australia's greenhouse policy instruments is to reduce greenhouse gas emissions (in particular, as implied by the targets summarised in Figure 3.1). This can only be achieved if emissions are genuinely reduced from what they would otherwise have been.
  • If ACCUs were granted for activities that people were going to do anyway, the offset system would not be reliable. For example, if it required no extra effort to reduce emissions, the price of ACCUs would fall. As the price fell, there would be no incentive for extra effort to reduce emissions.
  • Importantly, it is in the interests of participants to have strong additionality and integrity regulation. It would not be sensible to incur costs in a project if at any time the value of the credits earned could be undermined by a loss of confidence in the system.

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